Business Automation and Software Blog

Are You in Compliance with Sales and Use Tax Regulations?

Posted by Robert Baran on Tue, Jan 05, 2016 @ 11:00 AM

Manufacturers and distributors need to make sure that they are in compliance with the increasingly complex sales and use tax regulations. Automating sales and use tax collection, filing, and the exemption certificate process will help you maintain compliance and avoid an audit.

Sales tax exemption certificates are required any time customers claim that they don’t have to pay sales tax. It is your responsibility as the seller to maintain the certificates, keep them on file, and provide notice when it is time to replace an expiring certificate with a new one. While this sounds simple, the combination of e-commerce, increased sales tax regulations, and varying state requirements can make compliance a cumbersome, paper-driven process.

Managing exemption certificates manually is time-consuming. You may have new certificates to verify, incomplete ones to follow up on, and expiring ones to replace—not to mention thousands of records to sort through in the case of an audit. Are you storing paper versions of exemption certificates in file cabinets? Do you scan and save PDFs? Unless you have just a few customers and sell in only one state, you can realize tremendous benefits from automating the exemption certificate process.

If you have implemented document management software to automate this system, you have improved the process. However, while document management software centrally stores certificates, it lacks the other functions that are critical to reduce non-taxed sales audit exposure such as improving the validity of certificates submitted by customers.

Businesses that are best prepared have implemented Exemption Certificate Management (ECM) software to automate the collection and management of certificates and have integrated this software with their enterprise resource planning (ERP) and accounting software. ECM software provides critical workflow enhancement for manufacturing, e-commerce, retail, wholesale, and other channels of distribution.

Exemption Certificate Automation Increases Productivity and Eliminates Error

Automating any paper-driven, time-consuming process will provide tremendous benefits in increased productivity and accuracy. In addition, and possibly more importantly, automating certificate collection will minimize sales tax liability. Here is what you can expect from exemption certificate automation:

Faster collection and validation of certificates: For new exempt customers, you need to collect valid certificates as quickly as possible to ensure they are billed correctly and to speed the release of orders. Intelligent ECM software automatically imports customer records, sends certificate requests to new customers, sends renewal requests, and manages certificate information.

Fewer errors: When the ECM software is integrated with your ERP or accounting software, manual data entry is eliminated. Certificate and customer data flows seamlessly between the systems for improved billing and immediate audit data access.

Increased staff productivity: Automating the manual certificate process allows you to reduce the time and effort required to manage the process and to prepare for and manage auditor requests.

Improved customer purchase experience: A simple certificate process will eliminate customer frustration. Ideally, tax exemption certificates are collected at the time of sale. When sales associates are equipped with fast and easy access to the correct documents, the sales process is more efficient and customer-friendly. Many companies are beginning to offer tax exemption options in their online shopping carts as well.

Tax software seamlessly integrates with Sage 300

PositiveVision offers ECM software through our partner, Avalara. Avalara CertCapture is a cloud-based solution that streamlines manual processes and automates the collection and validation of tax exemption certificates. The software seamlessly integrates with Sage 300, (formerly known as Sage Accpac.)  By connecting these systems, each is able to share critical data including billing and shipping addresses, customer data, purchase history, open orders and more. This seamless integration is needed to reduce non-taxed transaction audit risk, increase productivity by automating manual certificate processes, and improve the exempt customer purchase experience.

If you sell numerous products and services to vendors or customers in multiple states, it may be time to automate your exemption certificate process. To learn more about sales and use tax compliance, download our free e-book, Sales and Use Tax Compliance for Dummies. Inside this book you will find detailed information, including the differences between sales and use taxes, when and where you need to collect tax, and how to avoid an audit. Contact us to learn how we can help you automate sales tax integrated with Sage 300.

Topics: Sage 300